October CPI up 2.1% year-on-year

Malaysian prices rose at their fastest pace in two years in October because of higher costs of cigarettes, alcohol and gasoline.  

The consumer price index rose 2.1% from a year earlier, the quickest since Oct 2002, the Department of Statistics said in a statement on Wednesday. The median forecast of 11 economists in a Bloomberg survey was for a 1.8% gain.  

Malaysia’s inflation has accelerated from 0.9% in February as the government reduces subsidies and raises taxes to reduce its budget deficit. Inflation of less than 2% since October 2002 has allowed the central bank to keep interest rates at record lows and spur investment and consumer spending.  

Malaysia raised the price of gasoline and diesel by 5 sen a litre in October, its second increase this year, to reduce the amount it sets aside to subsidize fuel costs amid surging crude oil prices.  

Inflation accelerated from 1.6% in September, led by a 13.1% rise in the cost of beverages and tobacco. Food prices, which account for about a third of the consumer price index, rose 2.98%. – Bloomberg 

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